Gateway Casinos Announces Successful Refinancing To Support Growth
Lower Cost and Flexible Capital Structure Supports Acquisition Financing and Allows for Significant Investment Throughout the Gateway Portfolio
BURNABY, BC, February 22, 2017 — Gateway Casinos & Entertainment Limited (“Gateway” or “Company”) announced today that it has completed the previously announced transactions for the purpose of refinancing its existing credit facilities and securing a new capital structure to support the Company’s growth initiatives. The new structure includes a C$125 million senior secured revolving credit facility, a senior secured term loan facility comprising a US$405 million tranche and C$80 million tranche (together, the “New Senior Secured Credit Facility”) and US$255 million of second priority senior secured notes due 2024 (the “New Notes”). In addition, the New Senior Secured Credit Facility was increased by US$25 million from its original target as a result of strong investor demand. Gateway’s cost of capital has been reduced with this transaction while obtaining financial flexibility and long-term maturities.
As part of the transaction, Gateway has (i) repaid all outstanding amounts under the Company’s existing senior secured credit facility, (ii) redeemed Gateway’s outstanding 8.50% Second Priority Senior Secured Notes due 2020 in the aggregate principal amount of C$200 million (the “Existing Notes”), (iii) financed the acquisitions from the Ontario Lottery and Gaming Corporation of certain gaming properties in Ontario (the “Ontario Acquisitions”), which are expected to be completed in the second quarter of 2017, and (iv) distributed US$100 million to
shareholders. The Ontario Acquisitions are expected to be immediately accretive to Gateway’s top-line growth, EBITDA margin and full year earnings. The use of proceeds will also include funding new developments and ongoing operations in Western Canada.
“Gateway is well positioned for continued development and growth across its platform of operations and we look forward to bringing our unique brands and experiences to Ontario,” said Tony Santo, Gateway’s Chief Executive Officer. “Gateway has a great portfolio that represents a higher standard for gaming and entertainment in the industry. Upon completion, the Ontario acquisitions are expected to be immediately accretive to Gateway’s revenue, EBITDA and earnings, giving us additional capacity to invest in the businesses while reducing leverage
over time. We are very excited about the future of Gateway as a business, employer and community stakeholder.”
“We are very pleased with the successful refinancing of the company, which was significantly oversubscribed and completed at a lower cost of capital and with flexible terms,” said Gabriel de Alba, Gateway’s Executive Chairman. “The new credit facilities acknowledge Gateway’s financial strength and the growth potential of the business, including the recent Ontario Acquisitions and current and new operations in Western Canada.” The transactions were executed by a syndicate of investment banks led by Morgan Stanley, and included SunTrust Robinson Humphrey, BMO Capital Markets, Macquarie Capital, CIBC Capital Markets, National Bank of Canada Financial Markets and ING.